MARKET PULSE: Nam Cheong, CDLHT, CSE Global (7 Jan 2013)

Stock Name: Nam Cheong
Company Name: NAM CHEONG LIMITED

Research House: OCBC

Price Call: BUY

Target Price: 0.30

Stock Name: CDL HTrust
Company Name: CDL HOSPITALITY TRUSTS

Research House: OCBC

Price Call: HOLD

Target Price: 1.93

Stock Name: CSE Global
Company Name: CSE GLOBAL LTD

Research House: OCBC

Price Call: BUY

Target Price: 0.99

MARKET PULSE: Nam Cheong, CDLHT, CSE Global

7 Jan 2013

KEY IDEA Nam Cheong: Strong vessel sales momentum Summary: Nam Cheong Limited's share price was up about 15% since our initiation report ("Dominant M'sian OSV Builder", 20/11/2012) less than two months ago. Last month, it sold one Platform Support Vessel (PSV) and two Anchor Handling Towing Supply (AHTS) vessels worth a combined US$56.4m, bringing its total number of vessel sold in 2012 to a record high of 21 (2011: 13 vessels). We believe this strong momentum will continue as Petronas catches up on its projected expenditures in the Malaysian oil and gas space. Meanwhile, as we adjust our model to take into account for the recent sales, our fair value estimate for the counter edges up to S$0.30 (previously S$0.28), still on 8x FY13F EPS. Maintain BUY. (Chia Jiunyang) MORE REPORTS CDL Hospitality Trusts: Proposed acquisition of Maldives resort Summary: CDLHT has announced the proposed acquisition of Angsana Velavaru in the Maldives from Banyan Tree (BT) for a total cost of US$72.4m. BT will lease back the property for 10 years and the rent payment will be GOP less management fees per annum, subject to a minimum rent and reserve of US$6m. Based on the pro forma annualised NPI for 9MCY12 of US$6.8m (after deducting outgoings of US$1.0m), as a percentage of the purchase price of US$71.0m, the NPI yield is 9.6%, versus the implied NPI yield of 6.0% for the existing portfolio. The transaction is subject to approval from a Maldivian ministry, which is likely to take over two weeks. Gearing post-acquisition will still be healthy at ~29%. Assuming the transaction is completed on 1 Feb, we raise our FV from S$1.91 to S$1.93 and maintain our HOLD rating on CDLHT. (Sarah Ong) CSE Global: Secures two contracts worth a combined S$26m Summary: CSE Global announced this morning that it has secured two contracts worth a combined S$26m. The first contract is a telecommunications project as part of the Inpex LNG project in Australia. The second is a full turnkey engineering project in the UK defense sector. As these contracts already form part of our S$600m new order estimate for FY13F, we are keeping our BUY rating and S$0.99 fair value estimate unchanged. (Chia Jiunyang)

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NEWS HEADLINES - US stocks rose on Fri to end with strong weekly gains, after data showed that the economy is continuing to add jobs at a moderate pace. The Dow rose 0.3% to 13,435.21 and the S&P 500 index gained 0.5% to 1,466.47, while the Nasdaq was flat at 3,101.66. - China Paper Holdings expects to report a loss for 4Q12 due to a drop in sales and selling prices for its paper products as a result of the slowdown in China's economy. It still expects a full-year profit for 2012. - Ocean Sky International plans to sell its main apparel business to a subsidiary of Hong Kong-listed apparel provider Luen Thai Holdings for US$55m cash. It intends to pay a special dividend of S$5.8m, or 1.6 S cents per share, on completion of the sale. - K-Green Trust has obtained a three-year term loan facility and revolving credit facility worth a total of S$100m.